Three Digital Transformation Truths and One Great MythBy Charles Araujo

It's conference season and, as you might expect, Jason and I have been on the road covering a bunch of them. It's always great to see what the disruptive players in the market are doing - and this year did not disappoint. But there is one thing that repeatedly happens that just gets under my skin: transformation-washing.

At virtually every event vendors bombarded the attendees with all the reasons that this tool or that solution was the driving force behind digital transformation. Unquestionably, many of these tools are innovative and represent genuine breakthroughs. But no tool, in and of itself, can lay claim to being digital transformation-in-a-bottle.

Ironically, we can trace the roots of this particular cancer to another buzzword-gone-wild: cloud. When cloud first hit the scene, it was a case study on this phenomenon. Every article I read - and indeed every pronouncement from the cloud vendors - talked about cloud as if it was synonymous with digital transformation.

Just move to the cloud, and you have transformed. Easy peasy.

My frustration wasn't in that I disagreed with the transformative potential of the cloud. I have long understood its transformative power. But having spent years helping large enterprise organizations execute transformational initiatives, I knew all too well that no real transformation was ever that one-dimensional.

There are plenty of organizations who have moved to the cloud and have been shockingly effective at transforming absolutely nothing.

Cloud is and always has been a mere tool. A tool that could be a powerful enabler of digital transformation, to be sure, but a tool nonetheless. And the passing of time has not changed this one bit.

The Damaging Effects of Transformation-Washing

None of this, however, has stopped vendors and pundits from gushing on and on about the transformative power of cloud - and now a whole host of technologies that have followed and evolved from that simple starting point.

This isn't, however, just a rant. The consequences are real, and the effects are damaging.

I recently participated in a Facebook Group discussion in which the gathered group of IT professionals were taking turns bashing digital transformation as nothing but vendors' blunt-force marketing weapon against enterprise customers.

I understood their frustration - and share it - but the grave risk is that they are now dismissing the very significant, true nature of digital transformation. And, in so doing, risk leaving their organizations unable to adapt to what is coming.

To avoid that fate, you must understand the three digital transformation truths and beware its one great myth.

The Three Digital Transformation Truths

Let's get this out of the way: digital transformation is a buzzword and, yes, technology vendors have rampantly abused it in pursuit of marketing advantage. I'm not sure if it has delivered their hoped-for marketing results, but the one effect we can be sure of is that they have successfully obscured its meaning.

Real digital transformation - the kind that Intellyx has always talked about - is not about some incremental shift in technology use. It's about a much more fundamental shift in organizational and societal structures. To understand its true nature, therefore, you must understand the three digital transformation truths.

Truth #1: It's a Power Shift

Beginning with the first dot-com era at the turn of the millennium, consumer technology companies burst onto the scene offering an entirely new breed of technology-powered customer experiences. We commonly refer to this as the consumerization of IT.

What most people more commonly miss, however, is that the evolution of easy-to-use consumer-based technologies, combined with their new-found ubiquity began a subtle, but rapid shift of power away from organizations to their customers.

As information became freely and instantly available, organizations lost control of the narrative. They could no longer dictate the terms of the engagement. It is this shift in power that precipitated what we now call the digital disruption of industries as technology upstarts stole long-safe customers by enabling this shift in control.

Truth #2: Transformation Begets New Business and Operating Models

Digital transformation is, essentially, the response to this digital disruption whether it be proactively (in the form of digital upstarts) or reactively (on the part of legacy organizations).

But simply introducing a new technology is not digital transformation. If you look at the organizations disrupting industries, you will find that the underlying technology itself is not necessarily that revolutionary. What is always revolutionary, however, is their business model.

The second digital transformation truth is that true digital transformation always begets new business and operating models. Always.

The shift in power away from organizations and to their customers means that every organization must reorient its business and operating models to respond to this new world order. A digital ‘transformation' that is not driven by this transformation of business and operating models is just window dressing.

Truth #3: Transformation Drives Organizational Change

The shift in power to the customer - what we call the primacy of the customer - and the establishment of new business and operating models then leads inexorably to the final truth: digital transformation must drive organizational change.

The natural outcome - the only outcome - of this power-shift and creation of new operating models is a fundamental transformation of the organization itself. It will take many forms, but organizations will transform themselves along organizational, structural and cultural dimensions in order to achieve customer-centricity and to enact their new business models.

At a minimum, this will lead to the breaking down of organizational silos, the pushing of decision making deeper into the organization, the adoption of self-organization principles and the flattening of hierarchies.

But regardless of form, organizations must execute this type of fundamental transformation to stay relevant.

This digital transformation tsunami will spare no industry and no organization - no matter how large or established. Only those organizations who acknowledge and respect the shift in power and then relentlessly reorganize and restructure themselves around serving their customers will survive.

The Great Digital Transformation Myth

As you absorb these truths, however, you must guard against the one great digital transformation myth. Ironically, it has to do with the transformative power of modern technology.

The myth - the refrain I most often hear from heels-dug-in IT professionals - is that this is nothing new. They smugly claim that IT professionals have been applying technology to solve business problems and, as a result, transforming the business, from the very beginning. To their ears, all this digital transformation talk is just marketing hype to describe business-as-usual.

Nothing could be further from the truth.

For most of our history, we applied technology to automate existing business processes. Some refinement and even re-engineering occurred as a result, but we were applying technology to what already existed.

Today's emerging technologies are astoundingly different. They are overturning long-held architectural models and embedding technology deep into the fabric of the organization, leaving paradigm shifts in their wake. It is, in fact, the emergence of these new technologies that are enabling the new customer-centric business models that are at the heart of digital transformation.

The Intellyx Take

There may be only one thing worse than buying into all the hype surrounding digital transformation: ignoring it.

The true essence of digital transformation is unsettling. Scary even. It represents an upturning of what governs most of our day-to-day existence. And because we're making this future up as we go, no one can say with any credibility that they know how this will all turn out.

But simply dismissing all of it as mere hype and carrying on as if nothing is changing is pure folly. You must accept that digital transformation, in all of its hype-laden glory, is real and will impact you, your organization, your children and everyone and everything you know. And it will happen sooner than you think.

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Mr. Bloomberg is the author or coauthor of four books: The Agile Architecture Revolution (Wiley, 2013), Service Orient or Be Doomed! How Service Orientation Will Change Your Business (Wiley, 2006), XML and Web Services Unleashed (SAMS Publishing, 2002), and Web Page Scripting Techniques (Hayden Books, 1996). His next book, Agile Digital Transformation, is due within the next year.

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